Opinion

Published

Cutting ties with the UK will do little to help Scottish SMEs

7 Mins

The Federation of Small Businesses in Scotland has come up with a drastic solution to the government’s dilemma of sparking economic recovery via small and medium-sized businesses. It says they should be abolished, that they should be wiped out like a stroke of the pen and it’s done – finito.

Alright then, I’m kidding; they don’t really want to destroy their entire membership. Actually, it’s the terminology that grinds their gears as 99 per cent of all Scottish firms are in the SME category, with zero to 250 employees. They reckon the term is so broad as to be meaningless. Before you say it, zero employees is meaningless too, I’ve worked that one out. Firms with a sole proprietor or owner and no employees are firms with zero employees.

Instead, FSB Scotland has told the Scottish government’s procurement managers to concentrate spending on micro firms – sole-proprietor businesses – and small businesses, which have up to ten staff. The reason being is that flexible small firms start hiring first when the recovery comes. Are they listening? Partly. The SNP opened a Business Gateway to advise firms on recruitment and innovation, but the FSB complain that it’s still geared too much for bigger firms. Not enough is being done for the established business which is neither a start-up nor a high-growth company.

These niceties are important, because one of the key claims for independence is that it will somehow boost smaller firms. Exactly how is less clear? The Yes campaign, which supports Scotland’s independence from the UK, has a Business for Scotland offshoot. This ensures that supporters who own companies write a glowing testimonial about how things will be better when the Westminster parties no longer rule Scottish affairs.

One of them, who’s opened a subsidiary in Sweden, says: “I have come to the conclusion that Sweden works as a small independent northern European country. This is largely because of the short communication connections in their society between the SME business owners and their elected representatives. These short societal connections allow Sweden’s business community and politicians to shape things together for the good of the SME environment. In Scotland, by contrast, the majority of fiscal/regulatory frameworks we operate under are decided by folk far away in London.”

Leaving aside the fact that most Scottish Office business support functions are in Edinburgh and Glasgow, Sweden is, geographically, a big country. As the fourth largest in Europe, it boasts plenty of SMEs who are found far away from the political capital, Stockholm. Likewise, Edinburgh is 400 miles from Shetland. Is that a hindrance to SMEs starting up in Lerwick? And what examples exist of firms doing well from short “societal connections”, but badly from longer ones?

There is never any explanation about how an independent Edinburgh regime will help small firms. Take John Swinney’s recent blog on the SNP website; the only nod towards the SME cohort is when he mentions the tireless work of our enterprise agencies for innovators and entrepreneurs. Firstly, the agencies were founded by previous Unionist governments and they’re not exactly renowned for thrusting rapid growth results.

In fairness to Swinney, he has promised more ideas in the coming months. But surely business folk are entitled to expect that an independence party would already have worked this stuff out?

It’s all so vague. Not that the anti-independence (pro-unionist) crowd are doing any better: they didn’t even bother replying to my request for their small business manifesto.

There are some who believe that the entire, and costly, referendum campaign is an exercise in partisan politics; candidates wrap themselves in tartan and appeal to the sentimental, chip-on-shoulder, hard-done-by Scot, who fights England’s wars and digs England’s coal. They argue that the problems faced by Scottish businesses and workers are little to do with English prejudice or sovereignty, but more about the shortcomings of policies that enrich the powerful and subject the poor to servitude in dreary jobs and living quarters.

Until the main parties address these fundamental issues, they say, there will always be room for an Alex Salmond figure to sneak in and whine away for separatism.

It’s worth remembering why Scotland became united with England. In the late 17th century, the Darien Scheme had started the world’s first stockmarket bear run. Shares in trade ventures with the Caribbean shot up in value, Scots piled in with gold, and then … the entire venture collapsed. This bankrupted most of Scotland.

The dowry of the marriage of the two countries was a write-off of Darien debt. A similar thing happened in 2008 when Scotland’s banks needed bailing out, courtesy not of the English banks or the Westminster government, but by the hard won taxes of the great mass of English workers and companies. Scotish businesses – large or small – should be very careful about cutting off their umbilical chord with England.

Bruce Whitehead’s column on Real Business explores the latest political developments and their effects on UK businesses.

Share this story

How female entrepreneurs are breaking Indian traditions
How to deal with late payments
Send this to a friend